ARKANSAS REAL ESTATE COMMISSION. Executive Director Comments By Gary C. Isom, Executive Director. March Arkansas Real Estate Commission

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1 March 2018 Arkansas Real Estate Commission 612 South Summit Street Little Rock, AR Phone: Fax: Administration: Web page: Members of the Commission Tony Moore, Chair Russellville Bob Walker, Vice Chair Jacksonville Linda Prunty Jonesboro Dee Holcomb Pine Bluff Doyle Yates Springdale Commission Staff Gary C. Isom Executive Director Andrea S. Alford Deputy Executive Director Yvonne Halstead AREC Supervisor ARKANSAS REAL ESTATE COMMISSION N E W S L E T T E R Executive Director Comments By Gary C. Isom, Executive Director Commissioner Doyle Yates Re-appointed to Commission Commissioner Doyle Yates, industry member of the Arkansas Real Estate Commission from Northwest Arkansas has been re-appointed by Governor Asa Hutchinson to a second three-year term. Commissioner Yates served the Commission as its 2017 Chairman. In this capacity he was instrumental in championing greater control over unlicensed practices by which consumers may be harmed. Another accomplishment during his term as chair was reducing the time for completing post-license educational requirements from twelve to six months following initial licensure. Many brokers have sought this change since post-license education was first implemented in Commissioner Yates is Executive Vice President of Coldwell Banker Harris McHaney & Faucette. Commissioner Tony Moore Elected Chair for 2018 At the January meeting of the Real Estate Commission, Commissioner Tony Moore, industry member from Russellville was elected 2018 Chairman. Chairman Moore was originally appointed to the Commission by Governor Hutchinson in Chairman Moore plans to bring to fruition an initiative on which the Commission has focused in recent years, the implementation of new advertising regulations. After much discussion and review Chairman Moore and his fellow Commissioners are convinced it s time to move forward with the development, approval and implementation of advertising guidelines that will address issues that have arisen in the real estate market by new business models and social media. Commissioner Moore is owner and Principal Broker of Moore & Company REALTORS in Russellville. Commissioner Bob Walker Elected Vice-Chair for 2018 His fellow Commissioners determined at the January meeting of the Real Estate Commission that it was time for Commissioner Robert Bob Walker to step up to Vice- Chair for Commissioner Walker is currently the Managing Broker of the Coldwell Banker RPM Group office in North Little Rock in addition to being a licensed Arkansas Real Estate Instructor. With a passion for quality real estate education, Commissioner Walker is already working with AREC Education and Instruction Specialist, Kortney Hinton to ensure a successful annual educator retreat for October. Commission Members Linda Prunty and Jessica Dee Holcomb add Consumerism to the Discussion Our two consumer members of the Commission, Linda Prunty of Jonesboro and Dee Holcomb of Pine Bluff manage quite often to get us all out of the weeds of our discus- (continued on page 2)

2 (continued from page 1) sion and put a real practical perspective on issues. Both appointed by Governor Hutchinson, bring significant value to the operation. Commissioner Prunty has a background in subsidized housing having served 30 years as a Regional Supervisor for an investment firm. She also worked with the Jonesboro Urban Renewal & Housing Authority. Commissioner Holcomb brings to the table valuable experience in two regulated professions, banking and insurance. She is currently an Agent with Shelter Insurance Companies, where she has been since 2014 only one year before being named Shelter Insurance s Agent of the Year in FORMAL HEARING DECISIONS Respondent(s): Jimmy Payne, Principal Broker, All Real Estate LLC, Fayetteville, Arkansas, Formal Hearing #3465 Violation(s): Arkansas Code Annotated (a)(2), (a)(4), (a)(6), (a)(7), (a)(11) and Commission Regulations 8.5(a), 9.2, 10.8(b), 10.8(g)(1), and 10.10(a). Sanction(s): Based upon these Findings and Conclusions, the Commission votes unanimously to revoke Respondent Payne s license. Mr. Payne is also ordered to pay a fine of $56,000 to the Arkansas Real Estate Commission. Complainant Eldora McCarty Respondent Payne went to Complainant Eldora McCarty s home to ask if Complainant McCarty was interested in purchasing an investment property. Complainant McCarty did not know if the property was listed with a real estate broker. On or about August 7, 2013, Complainant McCarty provided Respondent Jimmy Payne check number 3994, made out to Jimmy Payne in the amount of $20,000, to purchase at auction property located at 330 Willow Street, Farmington, Arkansas. Respondent did not reduce to writing Complainant McCarty s payment of $20,000. On or about November 14, 2013, Respondent Payne signed as received receipt No for $1,500 paid by Complainant McCarty with check number 1303, for anticipated closing costs in the event Complainant McCarty entered into an agreement to purchase the subject property. Respondent Payne did not reduce to writing the agreement or terms by which Complainant McCarty agreed to pay the closing cost. After November 2013, Respondent Payne contacted Complainant McCarty asking for an additional $5,000 to cover utilities, dumpster, and insurance which would be needed after the purchase of the property closed. Complainant McCarty stated that she paid $5,000 to Respondent Payne in response to the request. Complainant McCarty stayed in contact with Respondent Payne until November 2015, and requested information on the property status and copies of the contract documents. Respondent never provided status information or copies of documents to Complainant McCarty. After November 2015, Complainant McCarty was unable to contact Respondent Payne. On January 29, 2016, and May 2, 2016, the Commission sent a copy of Complainant McCarty s complaint to Respondent Payne. Respondent Payne did not respond. Complainant Rodney Elmore On February 12, 2012, the Arkansas Democrat Gazette reported Carol Anne Cooper, owner of subject property located at Jimmy Devault Road, Farmington, Arkansas, had passed away on February 6, On or about February 13, 2014, Complainant Elmore and his wife, Jennifer Elmore, in the name of ChrisRod Properties LLC, entered into a Real Estate Contract presented to them by Respondent Payne to purchase property located at Jimmy Devault Road, Farmington, Arkansas, from Seller Carol Anne Cooper (Deceased) in the amount of $32,917. Respondent Payne did not inform Complainant Elmore that Seller Cooper was deceased. Re- Page 2 (continued on page 3)

3 (continued from page 2) spondent Payne represented himself as a dual agent representing both Seller Cooper and Complainant Elmore. The contract was scheduled to close March 11, 2014, and the offer was to expire on March 10, There was no date on the Real Estate Contract showing when it was executed. On February 13, 2014, at Respondent Payne s request, Complainant Elmore had his bank transfer $1,500 to All Real Estate LLC s account at Metropolitan National Bank for earnest money. Respondent Payne s Trust Account on file with AREC is at Liberty Bank of Arkansas. On or about March 6, 2014, Complainant Rodney Elmore and his wife entered into a second Real Estate Contract to purchase property at Jimmy Devault Road, Farmington, Arkansas, from Seller Carol Anne Cooper in the amount of $30,416. Respondent Payne did not prepare a document terminating the first contract. Respondent Payne represented himself as a dual agent representing both Seller Cooper and Complainant Elmore. The contract was scheduled to close on September 5, 2014, and the offer was to expire on July 14, No one signed the Real Estate Contract on behalf of Seller Cooper. There was no date on the Real Estate Contract showing when it was executed. On March 6, 2014, at Respondent s request Complainant Elmore had his bank transfer an additional $2,500 earnest money to All Real Estate LLC s account at Metropolitan National Bank for the second Real Estate Contract. Respondent Payne s Trust Account on file with AREC is at Liberty Bank of Arkansas. On July 14, 2014, Respondent Payne contacted Complainant Elmore and requested an additional $11,000 in earnest money for the purchase of Jimmy Devault Road, Farmington, Arkansas. Respondent executed an Earnest Money Addendum referencing the contract between ChrisRod Properties LLC, and Seller Cooper in the amount of $15,000 which included signatures of all parties. On July 15, 2014, at Respondent s request Complainant Elmore had his bank transfer $11,000 in earnest money to All Real Estate LLC s account at Simmons First National Bank for the purchase of Jimmy Devault Road, Farmington, Arkansas. Respondent Payne s Trust Account on file with AREC is at Liberty Bank of Arkansas. On November 3, 2014, Complainant Elmore in the name of ChrisRod Properties LLC, entered into a Real Estate Contract to purchase property at Jimmy Devault Road, Farmington, Arkansas, in the amount of $59,900. Respondent represented Buyer Complainant Elmore. The Seller s name was left blank on the Real Estate Contract. The contract was scheduled to close on January 5, 2015, and the offer was set to expire November 4, Paragraph 7 of the Real Estate Contract Earnest Money was checked No, but Respondent verbally requested $12,000 in earnest money. Respondent Payne did not reduce the terms of the earnest money to writing. Complainant Elmore and Respondent signed the contract. The Real Estate Contract was not signed by the Seller as either accepted or rejected. On November 3, 2014, at Respondent s request Complainant Elmore had his bank transfer $12,000 in earnest money to All Real Estate LLC s account at Simmons First National Bank for the second Real Estate Contract, dated November 3, Respondent Payne issued a receipt to Complainant Elmore dated November 4, 2014, in the amount of $12,000. Respondent Payne s Trust Account on file with AREC is at Liberty Bank of Arkansas. On April 26, 2016, and May 2, 2016, the Commission sent a copy of Complainant Elmore s complaint to Respondent Payne. Respondent did not respond. Complainants Timothy and Sonya Sluik On or about April 23, 2015, prior to a contract being written, Complainants Sluik provided cashier check number in the amount of $4,000, payable to All Real Estate LLC, as a down payment for the property located at 926 E. New Hope Road, Rogers, Arkansas. Complainants Sluik stated in their complaint that Respondent Payne asked them to provide funds to show that we had down payment money and was serious about the house. He said (continued on page 4) Page 3

4 (continued from page 3) he would hold this money for us to bring to closing. Respondent Payne did not reduce to writing Complainants Sluik s agreement to pay the $4,000 down payment. Complainants Sluik signed a Buyer Agency Agreement with Respondent Payne. Complainants Sluik did not receive a copy of the signed Buyer Agency Agreement from Respondent Payne. On April 25, 2015, Complainants Sluik signed a HUD-9548 Sales Contract to purchase the property located at 926 E. New Hope Road, Rogers, Arkansas, in the amount of $134,000. The contract was scheduled to close within forty-five (45) days of the contract. The subject property was a foreclosed property offered for sale by the Secretary of Housing and Urban Development. Complainants Sluik also signed a Property Disclosure Program form, Owner Occupant/Investor Sales Contract, and other required HUD forms provided to them by Pemco Limited. Pemco Limited was an asset management and preservation company which was contracted with the U. S. Department of Housing and Urban Development, to facilitate the sale of the subject property. Respondent Payne signed all forms as the Selling Broker for Complainants Sluik. The terms of the contract required Complainants Sluik to provide a cashier check for Earnest Money in the amount of $1,000 payable to, and to be held by, First National Title Company, Bentonville, Arkansas, as the closing company. Respondent Payne did not provide Complainants Sluik a signed copy of the HUD-9548 form, or the other documents signed by Complainants. There was no written reference to the $4,000 down payment Complainants Sluik previously paid to Respondent Payne. On or about May 5, 2015, Respondent Payne told Complainants Sluik they needed to provide $300 for a HUD processing fee. Respondent Payne did not reduce to writing Complainants Sluiks agreement to pay the $300. Complainants Sluik provided $300 cash to Respondent Payne. Respondent Payne signed a hand written receipt dated May 5, 2015, for $300 received from Complainant Tim Sluik. On or about June 1, 2015, Respondent Payne told Complainants Sluik he needed a check for utilities in the amount of $1,500, which was to be held by him as a deposit in case there was damage to the subject property which could occur during the inspection and appraisal. Respondent Payne did not reduce to writing Complainants agreement to pay the $1,500. Complainants Sluik issued check number 1800, dated June 1, 2015, in the amount of $1,500 payable to Jimmy Payne. Complainants Sluik did not receive a receipt for the payment of $1,500. The check posted to Complainants Sluiks bank account on June 2, The check was endorsed by Jimmy Payne. Complainants bank, Arvest Bank, stamped the check as an On Us CK, which indicated the check was either cashed or deposited to another Arvest Bank Account. Respondent Payne s Trust Account on file with AREC is at Liberty Bank of Arkansas. Complainants Sluik had the utilities turned on at the subject property for the inspection and appraisal. No damages were incurred to the property during the inspection and appraisal. Complainants Sluik agreed to extend closing to July 15, Complainants Sluik were unable to close on or about July 15, 2015, due to the inability of all parties to contact Respondent Payne who was supposed to be holding the $4,000 down payment funds. Pemco Limited s contract, Forfeiture and Extension policy, stated a second extension of fifteen (15) days would be granted upon the payment of $25 per day for a total of $375. Complainants Sluik paid the extension fee to Pemco Limited with cashier check number in the amount of $375 to extend the closing date. Sometime between July 15, 2015, and July 24, 2015, Complainants Sluik met Respondent Payne s wife, Michelle Payne at a parking lot where she gave them, in cash, the $4,000 down payment Complainants Sluik had given to Respondent Payne on or about April 23, On July 24, 2015, Complainants Sluik closed on the purchase of the subject property at First National Title Company, Bentonville, Arkansas. The HUD-1 reflected a credit to Complainants Sluik for $1,000 earnest money, a credit for $125 for a refund of five (5) days of the extension fee paid to Pemco Limited, and a Commission paid to Page 4 (continued on page 5)

5 (continued from page 4) Respondent Payne in the amount of $4,020. On October 27, 2015, November 13, 2015, and May 2, 2016, the Commission sent a copy of Complainants Sluiks complaint to Respondent Payne. Respondent Payne did not respond. RECOVERY FUND ORDERS Complainant Eldora McCarty As a direct result of these proven violations, the Commission ordered Respondent Payne to pay Complainant Eldora McCarty, $21,500.00, within thirty (30) days of the date of the Order. Complainant Rodney Elmore As a direct result of these proven violations, the Commission ordered Respondent Payne to pay Complainant Rodney Elmore, $27,000.00, within thirty (30) days of the date of the Order. Complainant Timothy and Sonya Sluik As a direct result of these proven violations, the Commission ordered Respondent Payne to pay Complainants Timothy and Sonya Sluik, $2,100.00, within thirty (30) days of the date of the Order. After respondent Payne did not pay within thirty (30) days, all amounts awarded were paid from the Real Estate Commission s Recovery Fund. Respondent(s): Christopher Ray, Principal Broker, Edwenna Rowland, Executive Broker, Action Realty, Mt Ida, Arkansas, Formal Hearing #3495 Violation(s): Arkansas Code Annotated (a)(11) and Commission Regulations 8.5(a), 10.4(b), and Sanction(s): The Commission votes unanimously that Respondent Christopher Ray be assessed a penalty of $5,000.00, and that Respondent Ray take an additional 30 hour post-broker course, to be completed by December 31, The Commission votes unanimously that Respondent Edwenna Rowland be assessed a penalty of $1,000.00, and that Respondent Rowland take an additional 30 hour post-broker course, to be completed by December 31, On or about February 11, 2003, Respondent Ray purchased subject property in Section 32, Township 2 South, Range 24 West of the Fifth Principal Meridian, in Montgomery County, Arkansas. Sometime in 2004, Respondent Ray added restrictions to the warranty deed of subject property. On December 4, 2009, Respondent Ray acting in the capacity as President of Christopher Ray, Inc. listed property owned by Respondent Ray and his wife with his firm, Action Realty, in Mt. Ida, Arkansas. The property was situated in Section 32, Township 2 South, Range 24 West of the Fifth Principal Meridian, in Montgomery County, Arkansas. The expiration date of the Exclusive Right-to-Sell contract was December 30, On February 26, 2014, Complainant Buyer David Engelkes entered into a Real Estate Contract to purchase the Page 5 (continued on page 6)

6 (continued from page 5) subject property from Respondent Principal Broker Christopher Ray acting as President of Christopher Ray, Inc. and Principal Broker of Action Realty. By selecting and marking choice C. LISTING FIRM AND SELLING FIRM ARE THE SAME AND REPRESENT BOTH BUYER AND SELLER under Paragraph 19 Agency, Respondent Rowland, as Executive Broker and Respondent Ray as Principal Broker of Action Realty represented that Complainant Engelkes was a client of Action Realty. Respondent Ray and Respondent Executive Broker Rowland marked 1-A Item 31 LICENSEE DISCLOSURE on the Real Estate Contract as Not Applicable. Sometime prior to preparing the February 26, 2014 offer, Respondent Rowland was showing the subject property to her firm s client, Complainant Engelkes. Complainant Buyer Engelkes learned and informed Respondent Executive Broker Rowland his mobile home was older than that allowed by established restrictions for the property which stated manufactured homes shall not be older than ten years of age. Complainant Engelkes had informed Respondent Executive Broker Rowland that he wanted to purchase property on which he could place his mobile home. Respondent Executive Broker Rowland, acting as agent of her firm s client, Complainant Engelkes, did not advise Complainant Engelkes that he should consider making his offers on properties contingent on his ability to place his mobile home on the property. Based partly upon his conversation with his agent Respondent Executive Broker Rowland about the restriction, Complainant Engelkes decided to make an offer for the property in anticipation that he would be able to place his mobile home on the property. Respondent Christopher Ray accepted Complainant Engelkes offer. On April 24, 2014, Complainant Buyer Engelkes and Respondent Ray as Seller Christopher Ray Inc. closed the transaction at Mount Ida Abstract & Title Co. Inc. On May 26, 2015, a Default Judgment Declaring Rights and Granting Mandatory Injunction was issued by the Circuit Court of Montgomery County, Arkansas. Complainant Buyer Engelkes was the defendant and MQ Investments Inc., owner of a neighboring property, was the plaintiff. The judgment ordered Complainant Buyer Engelkes to remove the mobile home located on subject property within 30 days. The judgment ordered Complainant Buyer Engelkes to pay attorney fees and court costs in the amount of $1, RECOVERY FUND ORDER The Commission finds that as a direct result of the proven violations, Respondent Christopher Ray is to pay Complainant David Engelkes $5,723.25, within thirty (30) days of the date of this Order. ADDITIONAL ORDER If Mr. Ray pays the $5, to Complainant Engelkes, then the $5, penalty against Mr. Ray will be waived. However, if Mr. Ray does not pay the $5, to Complainant Engelkes within that thirty (30) day time frame, then the Recovery Fund will pay it. The Real Estate Commission will then proceed against Mr. Ray for the $5,723.25, plus the $5, penalty. Respondent(s): Carolin Arleta Perez, Principal Broker, Ronald Lee Swanton, Salesperson, Tri-State Real Estate, Wister, Oklahome, Formal Hearing #3507 Violation(s): Arkansas Code Annotated (a)(2), (a), (a)(13) and Commission Regulations 7.3(a), 8.5(a), 10.4(b), 10.4(d)(2), 10.10(a), 10.10(a)(1) 10.12(b) Page 6 (continued on page 7)

7 (continued from page 6) Sanction(s): The Commission votes unanimously that Respondent Perez pay a $1, fine to the Commission, and that Respondent Perez real estate license is revoked. The Commission votes unanimously that Respondent Swanton must take thirty (30) hours post licensure education thirty (30) days prior to reactivating his real estate license. On June 25, 2013, property owners Lamar and Eileen Pearce entered into an Exclusive Right-to-Sell Agreement with Tri-State Real Estate to list their property located at Chinquapin, lot 16, block 2 Ponderosa Lake Addition, Springdale, Arkansas. Sellers Pearce paid Tri-State Real Estate a non-refundable listing fee of $250 by check dated June 25, On June 22, 2014, an Addendum to the Exclusive Right-to-Sell Agreement was signed by Sellers Pearce extending expiration date to December 24, On November 2, 2014, Sellers Pearce entered into a new Exclusive Right-To-Sell Agreement with Tri-State Real Estate to list the property located at Chinquapin, lot 16, block 2 Ponderosa Lake Addition, Springdale, Arkansas. The listing price of the property was $194, The listing agreement began on November 2, 2014, and included an expiration date of May 2, On April 30, 2015, Principal Broker Respondent Perez s Oklahoma Real Estate License expired. Respondent Perez did not notify the Arkansas Real Estate Commission that her Oklahoma Real Estate License had expired. Respondent Perez removed her real estate sign from her office location that she had filed with the Arkansas Real Estate Commission. On October 2, 2015 Buyers Greg and Mona Neaville, through Crye-Leike Realtors, Springdale made an offer on the subject property for $194, Complainants Sellers Pearce accepted and signed the contract on October 29, The Closing date was scheduled for December 2, Paragraph 5 of the Real Estate Contract stated Seller to pay up 3% of sale price in buyers prepaid and closing costs. Sellers Pearce had actually agreed to pay up to 3%. Respondent Swanton did not provide Sellers Pearce a copy of the contract signed by all parties. On December 5, 2015, a General Addendum was executed by buyers and sellers extending the closing date to on or before December 22, Respondent Swanton did not provide Sellers Pierce a copy of the General Addendum signed by all parties. Sellers Pierce did not receive copies of the executed Real Estate Contract or General Addendum prior to closing. Respondent Swanton had planned to present the documents to the Sellers at closing. Prior to the scheduled closing Sellers Closing Agent Sheila Colvin of Realty Title & Closing Services ed Respondents Perez and Swanton the HUD document on December 16, Both Respondents Perez and Swanton claim they did not receive the or HUD document from Closing Agent Colvin. Respondent Perez did not make a satisfactory effort to obtain or review a copy of their Seller Client s closing statement prior to closing. The written closing instructions Respondent Perez provided to Realty Title & Closing Services, Closing Agent for their Seller Client only addressed the sales commission disbursement. In her instructions to Realty & Title Closing Services, Respondent Perez directed Closing Agent Sheila Colvin to issue a check directly to Salesperson Respondent Swanton for his portion of the sales commission. Respondent Perez had not signed the copies of the Real Estate Contract provided to the Buyers closing company, Prime Title and Escrow Company, or, to the Sellers closing company, Realty Title & Closing Services to indicate that she had reviewed the Real Estate Contract prior to closing. The copy of the Real Estate Contract Respondent Perez provided to the Commission with her answer to the complaint did include her signature as Principal Broker. The Buyers closed on December 21, 2015 with Prime Title and Escrow Company. The Buyers Total Settlement Charges were $2, Three percent of the purchase price, $5,820 was deducted from the Gross Amount Due from Borrower and identified as Sellers Credit. Page 7 (continued on page 8)

8 Law and Order, and Consent Orders issued by the Commission from FDecember 2016 (continued from page 7) Sellers arrived at Realty Title & Closing Services ahead of the scheduled time for closing. Sellers became upset when they learned they would have to pay to close. The Sellers closed on December 21, 2015, with Realty Title & Closing Services. Sellers Pearces proceeds at settlement were reduced by $5,820.00, identified as Seller paid closing costs. Complainant Sellers Pearce were required to pay $2, at closing. Sellers Pierce filed a formal complaint against Respondents Perez and Swanton with the Real Estate Commission regarding the lack of proceeds from the sale of their property. Respondents Perez and Swanton filed an answer to the complaint. After receiving her Client Sellers complaint, Respondent Perez did not make a satisfactory effort to obtain or to to review or have reviewed her Seller Client s closing statement to determine whether her client had been overcharged at closing. Real Estate Commission investigators discovered the $3,675 error when reviewing the Sellers closing statement and notified the Respondents and Closing Agent Colvin. Sellers Pearce withdrew their complaint after receiving compensation to settle the dispute. Respondent Swanton s real estate activities were concentrated in the area immediately surrounding Springdale, Arkansas, located a substantial distance from Respondent Perez s place of business in Wister, Oklahoma. Respondent Perez knew or should have known these circumstances significantly impaired her ability as a Principal Broker to provide adequate contact and communication; educational and instructional activities; and, monitoring of the real estate activities for her Salesperson Respondent Swanton. Respondent(s): Justin Colt Rogers, Salesperson, Re/Max Executives Real Estate, Fort Smith, Arkansas, Formal Hearing # 3504 Violation(s): Arkansas Code Annotated (a)(2), (6), (a)(7), (a) (11) and Commission Regulations 8.5(a), 10.1(b), and 10.7(a)(1). Sanction(s): The Commission votes unanimously that Respondent Justin Colt Rogers real estate license be revoked. On or about March 25, 2015, Respondent Rogers entered in to an Exclusive Right-To-Sell/Lease Agreement (Commercial) with Owner Stephen Lewis of Professional Assurances, Inc. for the listing for lease of property located at 1007 W Center St, Greenwood, Arkansas. The agreement began March 24, 2015, and expired July 24, There was no written property management contract with Owner Lewis. On or about November 22, 2016, Respondent Rogers accepted check # 2325 made out to Colt Rogers from Tenant Luck E Strike in the amount of $17, for Rent for August thru December On or about November 28, 2016, Respondent Rogers deposited check #2325 in the amount of $17,000.00, into his personal bank accounts with Farmers Bank in Greenwood, Arkansas. Respondent deposited $14,000 into one account and $3,000 into a second account. On or about January 12, 2017, Respondent Rogers had his bank transfer $17, to Professional Assurances, Inc., owned by Stephen Lewis. On or about January 13, 2017, Respondent Rogers received a wire transfer in the amount of $8, from Professional Assurances, Inc. for work he performed at the subject property for future marketing purposes while licensed with Re/Max Executive Real Estate in Fort Smith, Arkansas. Respondent Rogers Principal Broker was not Page 8 (continued on page 9)

9 (continued from page 8) FORMAL HEARING DECISIONS aware he was receiving compensation from the owner of the property. Respondent Rogers did not maintain account balances totaling or exceeding $17,000 from the time he received and Respondent(s): Bill McElwee, Principal Broker, Betty Krenz and Associates, Little Rock, Arkansas, Bill McElwee, Principal Broker, Guardian Realty, LLC, Little Rock, Arkansas, Formal Hearing #3561 Violation(s): Arkansas Code Annotated (a)(2), (a)(6), (a)(11) and Commission Regulations 8.5(a),10.4(d)(1), 10.7(b)(3), 10.8(c), 10.9(a), 10.9(b), 10.10(a), 10.19(a), 10.21(a), and 10.22(g). Sanction(s): The Commission voted that Respondent McElwee pay a $2, fine within thirty (30) days of notice of this matter or his license will be suspended immediately until that fine is paid. Additionally, Respondent McElwee will have 120 days to enroll in a property management course, or as soon as a property management course is offered. Additionally, following a recovery fund hearing determined in the future, Respondent McElwee will be required to make complete restitution as an outcome of that hearing. Respondent McElwee will then have thirty (30) days to pay the restitution or his license will be suspended if he does not comply with that restitution. Complainant Bill Lusk Respondent McElwee, as Principal Broker of Betty Krenz and Associates, managed multiple commercial properties for Complainant Property Owner Lusk. During November 2013, Complainant Lusk received two checks written on the Betty Krenz & Associates Rent Escrow Account for rental monies that were returned for non-sufficient funds. After receiving the non-sufficient funds checks issued from Betty Krenz & Associates Rent Escrow Account, Complainant Lusk verbally notified Respondent McElwee that he was terminating all property management contracts with Betty Krenz & Associates. Complainant Property Owner Lusk instructed Respondent McElwee not to deposit any future rental funds received on Complainant Lusk s properties. Respondent McElwee paid to Complainant Lusk the delinquency in rental funds caused by the checks returned for non-sufficient funds. Contrary to Complainant Lusk s instructions, Respondent McElwee continued to deposit rental funds he received for Complainant Lusk s properties. Respondent McElwee applied some of the collected rental funds to the cancellation fees Respondent McElwee claimed Complainant Lusk owed Betty Krenz & Associates. On or about November 16, 2013, Complainant Lusk transferred to Mike Berg Co. Management, the management of multiple commercial properties that were at that time under Property Management Agreements with Respondent McElwee as Principal Broker of Betty Krenz & Associates. On January 29, 2014, check # 1999 in the amount of $3,248, payable to Complainant Lusk, written on the Betty Krenz & Associates Rent Escrow account cleared the escrow account located at Metropolitan Bank. Documentation was not located in Respondent McElwee s records to demonstrate what the payment was for. On or about March 19, 2014, Complainant Lusk sent a letter to Respondent McElwee which stated it had been four months since the termination of his property management agreement and he had not received his final accounting or copies of his lease agreements. Complainant Lusk requested he be paid the balance of security deposits held by Betty Krenz & Associates, December 2013 rent which was deposited in conflict with his instructions, and the prepaid rent balance that was being held by Betty Krenz & Associates for one of his Tenants. No further disbursements were made from Betty Krenz & Associates to Complainant Lusk after receipt of the March 19, 2014 letter. Page 9 (continued on page 10)

10 (continued from page 9) Lusk Properties Barton Square and Riverwest Properties On March 3, 2009, Complainant Property Owner Lusk entered into a Property Management Agreement with Betty Krenz & Associates for the properties known as Barton Square and Riverwest. The agreement was for the period from March 3, 2009 until March 3, 2010, with automatic successive period renewals. The management fee was six percent (6%). The Agreement listed a cancellation fee equal to two (2) months management fee. Barton Square Properties Rental Funds On or about November 12, 2013, Check # in the amount of $8, issued to Complainant Lusk from Betty Krenz & Associates for Barton Square property s October 2013 rents was returned non-sufficient funds. Respondent McElwee issued Check # dated November 19, 2013, in the amount of $8, to pay the delinquency caused by the previously returned check for that same amount. On or about December 3, 2013, Tenant The Catch (Harold Grave) paid rent with cash in the amount of $2,333 for a Barton Square property. Receipt # 8058 was issued to Tenant The Catch. The cash was deposited to Betty Krenz & Associates Rent Escrow Account on or about December 3, Respondent McElwee did not disburse to Complainant Property Owner Lusk the rental funds Respondent collected from Tenant The Catch. On or about December 13, 2013, Tenant Creations Unlimited Another Level (Fred Martin) paid rent in the amount of $1,250 for a Barton Square property with Money Order # in the amount of $600 and Money Order # in the amount of $650. The money orders were deposited to Betty Krenz & Associates Rent Escrow Account on or about December 13, Respondent McElwee did not disburse to Complainant Property Owner Lusk the rent collected from Tenant Creations Unlimited Another Level (Fred Martin). Betty Krenz & Associates tenant ledger for Tenant Creations Unlimited Another Level (Fred Martin) reflected that Tenant Creations Unlimited had made double rent payments each month beginning January 1, 2013, which resulted in a prepaid rent balance at the end of November 2013 in the amount of $2,795. Respondent McElwee did not disburse to Complainant Property Owner Lusk the prepaid rent balance paid by Tenant Creations Unlimited nor did he reimburse Tenant Creations Unlimited for the double payments. Barton Square Properties - Security Deposits Tenant Lockhart Service Company entered into a Lease Agreement for the Barton Square property located at 8707 Kanis Road, Suite 4, Little Rock, Arkansas, for the period from April 1, 2012 through March 31, A Security Deposit of $725 was noted as held in agents Escrow Account. Tenant Lockhart paid the first month s rent of $725 and Security Deposit of $725 by check #13431 dated March 26, The check was deposited to the Betty Krenz & Associates Rent Escrow Account. Subsequently, $725 of those funds was transferred to the Security Deposit Trust Account of Betty Krenz & Associates. Respondent McElwee did not provide any trust account record to indicate that the $725 Security Deposit was disbursed to Complainant Lusk, Tenant Lockhart, Mike Berg Co. Management or otherwise. Tenant Smokey s Tobacco, Proprietor # 1 Essa Mustafa, entered into a Lease Agreement for the Barton Square property located at 1403 John Barrow Road, Little Rock, Arkansas, to expire on March 31, On March 6, 2013, Proprietor Essa Mustfa provided cash in the amount of $1,600 for the Security Deposit and receipt # was issued to Tenant Mustafa. On or about March 6, 2013, the Security Deposit was deposited to the Betty Krenz & Associates Security Deposit Account. On or about May 14, 2013, Proprietor # 2 Khattoum replaced Proprietor # 1 Essa Mustafa for Tenant Smokey s Tobacco and signed a new Lease Agreement with Betty Krenz & Associates for 1403 John Barrow Road to expire on May 31, A Security Deposit in the amount of $1,600 was listed on the lease agreement. A handwritten note Page 10 (continued on page 11)

11 (continued from page 10) FORMAL HEARING DECISIONS at the top of the lease agreement stated Transferred $1,600 Security Deposit from Essa., Proprietor #1. On or about October 23, 2013, Proprietor # 3, Abdelgani, replaced Proprietor # 2, Khattoum, for Tenant Smokey s Tobacco and signed a Lease Agreement for the 1403 John Barrow Road to expire on October 31, Respondent McElwee did not provide any trust account record to indicate that the Security Deposit held by Betty Krenz & Associates in the amount of $1,600 was disbursed to Complainant Property Owner Lusk, Tenant Smokey s Tobacco, Mike Berg Co. Management or otherwise. On or about November 1, 2013, Tenant The Catch (Harold Grave), entered into a Lease Agreement for the Barton Square property located at 1407 John Barrow Road, Little Rock, Arkansas, to expire on October 31, A Security Deposit in the amount of $2,333 was listed on the lease agreement. On or about November 1, 2013, Tenant The Catch paid $2,333 cash for the Security Deposit. The Security Deposit paid by Tenant The Catch in the amount of $2,333 was deposited to Betty Krenz & Associates Security Deposit account on or about November 4, Respondent McElwee did not provide any trust account record to indicate that the Security Deposit held by Betty Krenz & Associates in the amount of $2,333 was disbursed to Complainant Lusk, Tenant The Catch, Mike Berg Co. Management or otherwise. Riverwest Properties - Rental Funds On or about November 12, 2013, Check # in the amount of $6, issued to Complainant Property Owner Lusk from Betty Krenz & Associates for Riverwest October 2013 rents was returned non-sufficient funds. Respondent McElwee issued Check # dated November 19, 2013, in the amount of $6,376.38, to pay the delinquency caused by the previously returned check for that same amount. Rushing Circle Properties Rental Funds On or about January 1, 2013, Complainant Lusk, entered into a verbal agreement with Betty Krenz & Associates to manage the property known as Rushing Circle. On or about December 6, 2013, Tenant Kim-Lor provided Check # 5266 in the amount of $845 for a Rushing Circle property for December rent and water charges. The check was deposited to the Betty Krenz & Associates Security Deposit Account in error and later transferred to the Rent Escrow account. Respondent McElwee did not disburse to Complainant Lusk the rent collected from Tenant Kim-Lor. Complainant Hannah Owenga On or about January 10, 2014, Tenant Spencer Lofton paid an $850 security deposit to Property Manager Betty Krenz & Associates to rent property at 2318 Cherry Creek Circle, Bryant, Arkansas. On or about January 28, 2014, Complainant Tenant Owenga provided Money Order # in the amount of $935 for January 2014 prorated rent plus February rent for the subject property. Respondent McElwee did not provide AREC Investigators a copy of Complainant Tenant Owenga and Tenant Spencer Lofton s lease agreement with Betty Krenz & Associates. Respondent McElwee did not provide accounting records for Tenant Complainant Owenga. A move-in check list was found in the file which reflected a move in date of January 28, As a result of an employment transfer Respondent Principal Broker McElwee agreed to refund Complainant Tenant Owenga and Tenant Spencer Lofton s Security Deposit on or about September 13, 2014, prior to the expiration of the lease agreement. On or about October 10, 2014, Complainant Tenant Owenga received check # 1124 on the account of Betty Krenz & Associates Security Deposit Trust Account in the amount of $700 for the Security Deposit Refund. The check Page 11 (continued on page 12)

12 (continued from page 11) had Respondent McElwee s signature. Deductions were made for $50 Administration Fee, $50 Blind Repair and $50 Truck/Hauling. On October 30, 2014, Complainant Tenant Owenga deposited the $700 security deposit refund check issued from Betty Krenz & Associates to her bank account. On November 4, 2014, the check issued to Complainant Tenant Owenga for the Security Deposit refund was returned as non-sufficient funds. Tenant Owenga was charged an overdraft fee of $36 and a return item fee of $15 by her bank. Complainant Shawn Shannon On May 26, 2010, Complainant Property Owner Shannon entered into a Property Management Agreement with Betty Krenz & Associates for the property located at 7116 Shamrock, Little Rock, Arkansas. On September 7, 2010, Tenants Townsend signed a Residential Lease Agreement for the property located at 7116 Shamrock, Little Rock, Arkansas, for the period from September 7, 2010 through August 31, Tenants Townsend paid a Security Deposit in the amount of $1,500 and the monthly rent amount was $1,500. Complainant Shannon ed her approval for the lease with Tenants Townsend. On or about August 22, 2014, Respondent McElwee signed check # 5068 in the amount of $508 for August 2014, rent distribution to Complainant Property Owner Shannon. The bank reconciliation for Betty Krenz & Associates Rent Escrow Account dated August 31, 2014, listed check # 5068 as outstanding. Subsequent bank statements for the Betty Krenz & Associates Rent Escrow Account did not reflect check # 5068 as clearing the bank account. On February 1, 2016, AREC received a copy of check # 5068 which Complainant Property Owner Shannon stated she had misplaced and never deposited to her bank account. Betty Krenz & Associates Rent Escrow Account did not reflect check # 5068 cleared the bank through October 31, 2014, and was not re-issued by Respondent McElwee. Upon receiving a letter from Executive Broker Krenz in September 2014, pertaining to the closure of her business, Betty Krenz & Associates on October 31, 2014, Complainant Property Owner Shannon responded with a written request to terminate her Property Management Agreement effective October 31, 2014, and requested all documents and security deposit funds be forwarded to her new property manager. On or about October 29, 2014, Respondent McElwee provided Complainant Shannon with a final accounting of funds and issued check # 5159 in the amount of $2, On November 25, 2014, Complainant Shannon received notification from her bank that the check issued from Betty Krenz & Associates rent escrow account in the amount of $2, was returned due to insufficient funds. Respondent McElwee never reissued payment to Complainant Shannon for the insufficient funds. Respondent McElwee did not provide any trust account record to indicate that the Security Deposit held by Betty Krenz & Associates in the amount of $1,500 was disbursed to Complainant Shannon, Tenants Townsend Complainant Shannon s new property manager, or otherwise. Complainant Eugene Aist Complainant Property Owner Aist entered into a Property Management Agreement dated April 26, 2007, with Betty Krenz & Associates for the property located at 8 West Windsor, Little Rock, Arkansas. On or about September 4, 2007, Tenants Shabazz identified as Resident entered into a Residential Lease/Rental Agreement for the property located at 8 Windsor, Little Rock, Arkansas, for the period from September 1, 2007 through September 1, The Agreement included a $350 Security Deposit and monthly rent of $650. The lease agreement stated Management acknowledges receipt from Resident in the amount of $350 as Security Deposit On or about May 21, 2013, Property Manager Debbie Hagan of Betty Krenz & Associates provided written notice to Tenants Shabazz for a rent increase to $850 per month effective July 1, The notice stated if Tenants Sha- Page 12 (continued on page 13)

13 (continued from page 12) bazz did not execute a new lease agreement they should vacate the property by July 1, Tenants Shabazz paid June 2013 rent in the amount of $650. On or about June 12, 2013, Betty Krenz & Associates sent an invoice to Tenants Shabazz in the amount of $115 for the cost invoiced by Krenz Maintenance to repair a broken window caused by Tenants children. Tenants Shabazz did not pay the invoice. The amount was deducted from Complainant Aist s rent proceeds for June Tenants Shabazz vacated the property on or about July 1, Respondent McElwee did not provide any trust account record to indicate that the Security Deposit held by Betty Krenz & Associates in the amount of $350 was disbursed to Complainant Aist, Tenant Shabazz, or otherwise. On October 10, 2013, Complainant Aist received invoice # 517 for an advance payment of $1,200 from Krenz Maintenance for partial draw for materials and parole. Complainant Aist issued check # 1385 in the amount of $1,200 to Betty Krenz Maintenance. The check was deposited to the Betty Krenz & Associates Rent Escrow Account on October 16, Respondent McElwee did not provide monthly accounting for October through December 2013, to Complainant Aist and failed to provide Complainant Aist an accounting for the $1,200 payment. From March until April 22, 2014, Respondent McElwee billed Complainant Aist $1, for repairs and maintenance performed by Krenz Maintenance. Complainant Aist discovered that the repairs he had been billed for and paid were not completed as Respondent McElwee had indicated. Respondent McElwee did not provide monthly accounting statements to Complainant Aist for the months of February and March On or about April 12, 2014, Tenants Price and Howard signed a Residential Lease/Rental Agreement for the property 8 W. Windsor for the period from April 8, 2014 through April 7, 2015, for a monthly rent of $850. The lease agreement included a security deposit of $850 and monthly rent of $850. The lease agreement stated Management, on behalf of Owner, acknowledges receipt from Tenant the amount of $850 as Security Deposit. Prior to the date of the lease agreement, on April 2, 2014, Respondent McElwee had deposited to Betty Krenz & Associates Security Deposit Trust Account $850 CASH from Tenant Virginia Howard for the Security Deposit. Respondent McElwee did not maintain a copy of a numbered receipt for the cash funds received from Tenants Price and Howard. Tenants Price and Howard paid for pro-rated rent in the amount of $495 which was deposited to Betty Krenz & Associates Rent Escrow Account. Respondent McElwee did not provide a monthly accounting to Complainant Aist for April May 1, 2014, Tenants Price and Howard failed to pay May 2014 rent. Respondent McElwee did not provide a monthly accounting to Complainant Aist for the month of May On or about June 9, 2014, Complainant Aist sent an to Respondent McElwee requesting a monthly accounting of 8 W. Windsor claiming he had not received an accounting since Respondent McElwee became Principal Broker. On or about June 17, 2014, Respondent McElwee sent an accounting of monthly activity to Complainant Property Owner Aist for the period from March 2014 through June 17, Respondent McElwee applied the $850 security deposit paid by Tenants Price and Howard to June 2014 rent. The statement reflected a balance due from Complainant Property Owner Aist in the amount of $ July 22, 2014, Attorney Rick Sellars provided an unlawful detainer letter to Tenants Price and Howard for failure to vacate the property at 8 W. Windsor. Complainant Aist expended $780 to take back possession of his property. Complainant Vicki Smith On April 17, 2008, Complainant Property Owner Smith entered into a Property Management Agreement with Respondent McElwee, Principal Broker, Progressive Realty and Management, for the property located at 5107 Natalie, Page 13 (continued on page 14)

14 (continued from page 13) Alexander, Arkansas. A cancellation fee of $200 was noted in the Agreement. Other provisions stated all late fees belong to the agent. The management fee was ten percent (10%) of gross rent collected. On October 7, 2008, Complainant Property Owner Smith entered into a Property Management Agreement with Respondent McElwee, Principal Broker, Progressive Realty and Management for the property located at 5 White Cloud, Greenbrier, Arkansas. A cancellation fee of $250 was noted in the Agreement. Other provisions stated a Leasing/set-up Fee of $100 applys (sic). Late fees were not referenced in the agreement. The Management fee was seven percent (7%) of gross rent collected. On March 29, 2012, Respondent McElwee sold his business Progressive Realty and Management and transferred all contracts and agreements to Betty Krenz & Associates. Respondent McElwee allowed his Broker license to expire on January 1, Prior to Respondent McElwee becoming Principal Broker for Betty Krenz & Associates, prior Tenants Traxler leased the property located at 5107 Natalie, Alexander, Arkansas for the period from April 1, 2012 through June 1, A Security Deposit of $950 was recorded as received on April 3, 2012, from Tenants Traxler. On November 22, 2013, after Respondent McElwee became Principal Broker for Betty Krenz & Associates, check # 1048 was issued from Betty Krenz & Associates security deposit trust account and deposited to the Betty Krenz & Associates rent escrow account in the amount of $950. The deposit description noted 5107 Natalie/Traxler Transfer Security Deposit. On or about November 22, 2013, check # 1929 in the amount of $ was issued to Tenants Traxler. The memo on the check stated Security Deposit Refund. Respondent McElwee did not provide any trust account record to indicate that the balance of the Security Deposit held by Betty Krenz & Associates in the amount of $ was disbursed to Complainant Smith, Tenants Traxler, or otherwise. After Tenants Traxler vacated the property located at 5107 Natalie, Tenant Linam entered into a lease agreement. Tenant Linam ceased to pay rent after October The property at 5107 Natalie was vacant November 2013 and December Prior to Respondent McElwee becoming Principal Broker for Betty Krenz & Associates, on May 18, 2012, Tenants Adcock entered into a Lease Agreement for 5 White Cloud, Greenbrier, Arkansas. During the term of their lease agreement, Tenants Adcock paid $145 in late fees which were not paid to Complainant Smith. The property management agreement did not state late fees were to be retained by the managing agent. Respondent McElwee did not provide any trust account record to indicate that the balance of the late fees was disbursed to Complainant Smith or otherwise. Prior to Respondent McElwee becoming Principal Broker for Betty Krenz & Associates, on or about July 26, 2013, Tenants Keith signed a lease agreement for the property located at 5 White Cloud, Greenbrier, Arkansas. A Security Deposit of $1,200 was listed on the lease agreement. Tenants Keith paid the monthly rent as stated of $1,200 from August 1, 2013 through December 31, A separate Security Deposit Agreement was signed by Tenants Keith and a note was written on the bottom which stated, $500 to be paid and $100 per month until paid. Between August 1, 2013 and December 30, 2013, Tenants Keith made additional payments toward the security deposit in the amount of $400. The total Security Deposit held on December 2013 was $900. On November 7, 2013, Complainant Smith sent an to Betty Krenz & Associates to terminate the property management agreement for 5107 Natalie, Alexander, Arkansas. On November 10, 2013, Complainant Smith signed a Property Management Agreement with Mike Berg Co. Management for 5107 Natalie, Alexander, Arkansas. On or about January 31, 2014, Respondent McElwee issued check # 3414 in the amount of $1,712 payable to Complainant Smith. The check was for the final distribution of rents due to Complainant Smith for both properties managed by Betty Krenz & Associates. The property located at 5107 Natalie was vacant for November and De- Page 14 (continued on page 15)